Baum v. McBride
| Decision Date | 06 January 1950 |
| Docket Number | No. 32704,32704 |
| Citation | 152 Neb. 152,40 N.W.2d 649 |
| Parties | BAUM v. McBRIDE. |
| Court | Nebraska Supreme Court |
Syllabus by the Court.
1. It is a fundamental principle of jurisprudence that material facts or questions which were in issue in a former action, and were there admitted or judicially determined, are conclusively settled by a judgment rendered therein, and that such facts or questions become res judicata and may not again be litigated in a subsequent action.
2. It is a general rule that capital furnished by any partner, in the absence of agreement to the contrary, is a debt owing by the firm to the contributing partner and necessarily is to be repaid him if the firm assets are sufficient after paying the firm liabilities to outsiders.
3. In the absence of an agreement, express or implied, partners share equally in the profits and losses of the business and on dissolution are entitled to the repayment of any capital contributed.
4. Generally when a partner uses his copartner for an accounting the burden of producing evidence on which the full account of the partnership can be stated is primarily upon the plaintiff and if he cannot furnish sufficient evidence to enable the court to state the account his suit necessarily fails.
5. However, it is the duty of a partner to account to the partnership for any benefit and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from any use of its property.
6. Ordinarily, in the settlement of partnership accounts, interest should not be allowed until after a balance is struck on a settlement between the partners unless there is a different agreement between them or unless, under the peculiar facts and circumstances, the equities demand that interest be charged.
7. Only when provided for by statute can an attorney's fee be allowed and taxed as costs.
F. J. Reed, Mitchell, for appellant.
Mothersead, Wright & Simmons, Scottsbluff, for appellee.
Heard before CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE, and BOSLAUGH, JJ.
This is an appeal by Theodore Baum, plaintiff, from an order of the district court for Scotts Bluff County establishing the rights of the partners to the assets of the partnership of the McBride Potato Company. This court has previously affirmed an order holding it was a fifty-fifty partnership and ordered a dissolution thereof. See Baum v. McBride, 143 Neb. 629, 10 N.W.2d 477. Harold G. McBride, defendant, has cross-appealed.
On November 7, 1942, O. P. Burrows was appointed referee to take charge of and liquidate the assets of the partnership. This he did by sale held on October 23, 1943. According to his reports he received the sum of $16,100.55 for the assets of the partnership that came into his possession. After the mandate of this court came down in Baum v. McBride, supra, Auburn H. Atkins was appointed referee to try the issues affecting the rights of the parties thereto and did so, making his report thereof to the court. This report, as amended, was approved by the court and judgment entered accordingly. It is from the entry thereof, after both parties had filed and had motions for new trial overruled, that this appeal and cross-appeal were taken.
Appellant will herein be referred to as Baum and appellee as McBride.
This action, being in its nature equitable, comes under the provisions of section 25-1925, R.S.1943, and is here for review de novo.
As stated in Callahan v. Prewitt, on rehearing, 143 Neb. 793, 13 N.W.2d 660: 'It is a fundamental principle of jurisprudence that material facts or questions which were in issue in a former action, and were there admitted or judicially determined, are conclusively settled by a judgment rendered therein, and that such facts or questions become res judicata and may not again be litigated in a subsequent action.' This principle is not applicable to the issues before us for the trial court, in the original trial, expressly limited the issues to the question of whether or not there was a partnership and reserved the question of the rights of the parties to the proceeds, and we so limited our opinion. See Baum v. McBride, supra.
The evidence establishes that the partnership began about September 1, 1939. Baum testified: 'He (McBride) said that we would put everything we had together and start in the potato deal.' Baum had no property to put in the partnership but was to secure sufficient financial backing to enable it to carry on its business. This he did through his father.
The record contains no evidence that any agreement was ever made or understanding had between these parties, at the time they entered into this partnership, of how the capital furnished by each of the partners should be distributed in case of a dissolution of the partnership. Under this factual situation we find the following principles applicable to the capital furnished to the partnership by McBride at the time of the formation thereof:
'It is a general rule that capital furnished by any partner, in the absence of agreement to the contrary, is a debt owing by the firm to the contributing partner, and necessarily is to be repaid him, if the firm assets are sufficient after paying the firm liabilities to outsiders' . In re Chapin's Estate v. Long, 205 Mo.App. 414, 224 S.W. 1012, 1013.
'But where, as is usual in an ordinary mercantile partnership, a partnership is created not merely in profits and losses, but in the property itself, the property is transferred from the original owners to the partnership, and becomes the joint property of the latter; a corresponding obligation arises on the part of the partnership to pay the value thereof to the individuals who originally contributed it; such payment cannot indeed be demanded during the continuance of the partnership, nor are the contributors, in the absence of agreement or usage, entitled to interest; * * *.' Whitcomb v. Converse, 119 Mass. 38, 20 Am.Rep. 311.
As stated in Adams v. Hubbard, 221 Pa. 511, 70 A. 835, 837, in quoting from 22 Am. & Eng.Ency. of Law (2d ed.), pp. 86 and 87, as follows:
As stated in Newman v. Newman, 145 Tex. 433, 198 S.W.2d 91, 93: 'Neither her pleadings nor those of the defendants alleged a special agreement taking the partnership arrangement out of the general rule that upon dissolution, where one has contributed capital and another services, the one contributing the capital is entitled to withdraw its value.'
See, also, 40 Am.Jur., Partnership, s. 348, p. 373; 47 C.J., Partnership, s. 861, p. 1172; and Neudecker v. Kohlberg, 3 Daly (N.Y.) 407.
In this respect we will not consider the assets and liabilities of the potato spraying partnership of McBride and Baum, which assets and liabilities were taken over and absorbed by the partnership here involved, for the reason that McBride and Baum were the only partners therein and on a fifty-fifty basis, the same as here. Likewise, we will not consider the individual cars of the partners as any part of the partnership. While these cars were used by the partners in the business and the operation and upkeep thereof, while so used, were paid for out of partnership funds, nevertheless, the ownership was individual and the payments thereon, when made by the partners from partnership funds, were and herein will be charged to each of the partners as funds received from the partnership.
The evidence establishes that on September 1, 1939, when the partnership began, it took over and operated under the name of 'McBride Potato Company,' which trade name had previously been used by McBride in connection with his business. When the partnership started operating it took over that account in the bank. McBride then had on deposit therein the sum of $86.60. The partnership also took over and used certain personal property of McBride which he had been using while individually operating the business of buying and selling potatoes prior to September 1, 1939. The personal property so taken over consisted of two potato graders worth $250 each and office and warehouse equipment, which included several sets of scales, two typewriters, two desks, chairs, filing cabinets, etc., reasonably worth $250. The partnership also took over from McBride 21 bales of printed bags worth $62.35 per thousand and 50 pounds of twine worth 30 cents per pound. The evidence does not show the number of bags in each bale but apparently they held 1,000 bags each as it was computed on that basis and Baum takes no exception to the computation. These bags were worth $1,309.35 and the twine $15.
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